The US dollar has fallen below 1.3300 against the Canadian dollar due to a rebound in oil prices and increased demand for commodity-related currencies.
USD/CAD analysis shows that a bearish head-and-shoulders pattern is warning of a potential decline towards the 1.3100 support area.
USD/CAD medium-term price trend
The US dollar has given back a significant portion of its recent gains against the Canadian dollar, following multiple technical rejections from the 1.3400 resistance zone.
USD/CAD technical analysis over the medium term highlights the 1.3100 support area as a potential bearish target below 1.3300.
Bollinger Band analysis on the daily time frame shows that 1.3100 is a major target if weakness persists below the 20-period simple average around the 1.3260 level. Multiple daily price closes below 1.3260 is likely to see the USD/CAD pair testing towards the lower time Bollinger Band, around the 1.3100 area.
If bulls gain traction above 1.3260, then a recovery towards the 1.3320 or 1.3350 levels remains possible. The upper Bollinger Band on the daily time frame is located around 1.3430.
USD/CAD short-term price trend
USD/CAD analysis shows that the pair only has a short-term bullish bias while the price trades above the 1.3350 resistance level.
The four-hour time frame shows that a bearish head-and-shoulders pattern has formed, following last week’s heavy rejection from the 1.3420 area. According to technical analysis, sellers need to move the USD/CAD pair below 1.3260 to activate the bearish reversal pattern.
Looking more closely at the bearish pattern, the USD/CAD pair could decline towards the 1.3100 area if the pattern is activated.
Key short-term support for the USD/CAD pair below 1.3260 is located at the 1.3220, 1.3200, and 1.3160 levels.
USD/CAD technical summary
USD/CAD analysis shows that the pair could face a major technical sell-off towards 1.3100 if weakness persists below the 1.3260 support area.